Executive Briefings

Are Free-Trade Policies Helping or Hurting U.S. Manufacturing Workers?

By: New York Times 08.07.2013

President Obama publicly deplores growing economic inequality in the United States. At the same time, he is pushing for a new Trans-Pacific Trade Agreement on top of the trade agreements he won in 2011. Evidently, he sees no inconsistency here, but a growing body of economic research points to the adverse effects of lowered tariff barriers on manufacturing workers and their communities. Whether or not the losers are beginning to outnumber the winners, free trade is increasing the economic distance between the two.

Many economists continue to believe that increased foreign trade is a rising tide that will eventually lift all boats. Still, the discipline has been shaken by interpretations of trade theory that challenge this view, especially when articulated by highly respected scholars such as the late Paul Samuelson of the Massachusetts Institute of Technology.

The persistence of high long-term unemployment - conveniently assumed out of existence by standard trade models - has also taken an ideological toll. Economists once celebrated the resilience of the United States labor market. Not any more. Employment remains lower than it was in December 2007.

Many economists continue to believe that increased foreign trade is a rising tide that will eventually lift all boats. Still, the discipline has been shaken by interpretations of trade theory that challenge this view, especially when articulated by highly respected scholars such as the late Paul Samuelson of the Massachusetts Institute of Technology.

The persistence of high long-term unemployment - conveniently assumed out of existence by standard trade models - has also taken an ideological toll. Economists once celebrated the resilience of the United States labor market. Not any more. Employment remains lower than it was in December 2007.